India’s aviation sector is driven by a combination of policy and macro trends. Rising incomes and increasing urbanisation have created demand. Initiatives such as the RCS-UDAN encourage air travel, and policy has encouraged the development of world-class airports across the map, often via private sector investment.
The privatised airline industry has seen consolidation as well as new entrants. The big story is, of course, the takeover of Air India and Air India Express by the Tata Group, and the merger of Vistara with Air India. While IndiGo is, by far, the dominant player, with a 65 per cent market share, Air India Group holds 25 per cent. New carriers such as Akasa Air and Fly91 are also in the game. Akasa has launched international operations, while Fly91 is focused on Tier II and III cities. The industry is likely to see the advent of another set of new players, such as Air Kerala, Alhind Air and Shankh Air, in 2025.
Huge orders have been placed for new aircraft. The current fleet size is over 800. Some of the mega orders include 470 aircraft for Air India, 500 for IndiGo and 150 for Akasa Air. The demand for maintenance, repair and overhaul (MRO) services will inevitably increase. Ideally, that demand should be met locally, with India developing into a regional MRO hub.
On the infrastructure front, airport capacity has been steadily expanding. There are mega greenfield projects such as Navi Mumbai Airport and Noida International Airport, as well as major capacity expansion projects at existing facilities. Alongside the new airport at Ayodhya, expansions have been carried out at Tirupati, Kolkata, Port Blair, Pune, Trichy, Kolhapur, Gwalior, Jabalpur, Dehradun and Rajkot. There are ongoing projects in Chennai, Udaipur, Dholera, Jodhpur, Hubbali, Belgaum, Kadapa, Goa, Jammu, Vijayawada, etc.
All of these facilities are designed to be world-class in quality as well as sustainable, with technology induction across the operational chain. Delhi Airport, for instance, has deployed advanced technologies at the airport operations centre, as well as biometric self-immigration kiosks and internet of things-based vehicle tracking. Delhi has also achieved net-zero at the Scope 1 and 2 levels. It uses AI to predict queue wait times as well. Other airports are moving in similar directions.
The long-term trends are clear. Demand will continue to grow. For instance, Delhi is bracing for a doubling of passenger traffic over the next decade. The aircraft orders are an indicator of airlines betting large on growth. Given the massive investments, they must aim to maintain high passenger load factors, and also hope to develop cargo as a revenue stream. Fuel price is a crucial variable, outside airlines’ control, which could affect outcomes.
Airport infrastructure has to be made “future-proof” and sustainable, and airports must find ways to develop cityside revenue streams. Policymakers will also have to ensure that rising air-traffic is managed optimally – which will also be facilitated by technology.
As far as airlines are concerned, the current duopoly is a matter of concern. The smaller operators will fight for market share, while the two big incumbents will try to maintain it, albeit in an expanding market.
India is the world’s third-largest domestic aviation market, and it will continue to grow quickly. It has good airport infrastructure and the network is expanding in footprint and capacity. Airlines have invested heavily in increasing capacity. Now, everything depends on demand, and on the cost of variables such as fuel.